Archive for February 2009

The one party digital state took a big step forward recently as Yahoo announced that they are closing their content match network in Europe. The announcement was dressed up with the usual PR spin about how they want to concentrate on their search network advertising. However, cynics might suggest that Yahoo’s reach is now so poor in Europe that they decided to withdraw due to a lack of interest from advertisers.

Overall, this is bad news for the European content advertising scene as well as for the various resellers who promote the Yahoo service. The erosion of choice in the contextual market means that publishers will find their margins increasingly under pressure. With the weaker players in the market continuing to contract there is a serious lack of choice now available to publishers. This means that their bargaining power is declining and the choice they have is between a low margin from the one network with good coverage or a high margin from a network with no advertisers.

It is not just British savers who are getting hammered by the recent fall in the value of the pound. UK based Google partners are also seeing their earnings evaporate as Sterling has withered against the US dollar. CPC rates for UK partners have collapsed by as much as 35% since the last quarter of 2008. Despite a small bounce in the pound’s value in the last few days the prospects for a meaningful recovery are thin.

In addition to the weakness of exchange rates, adsense and adwords partners have to worry what impact the collapsing UK economy will have on their CPCs. PPC coverage has held up well so far against other forms of online advertising, the decline in CPCs is largely down to the decline of sterling which has accurately tracked CPC erosion. However, with dark rumours about broad matching relevancy and grumbles from advertisers about conversion rates, it will be interesting to see how many adwords budgets get pulled or reduced in the near future. If this happens publishing partners will suffer a double whammy to their Google revenue from both decreasing ad spend and unfavourable exchange rates.

One way that UK publishers can offset this problem is to try and get some exposure to other markets. The pound might have taken a beating recently but if you are harvesting a large number of your clicks from the Euro zone or US you will have been relatively unaffected by this problem. It might just be time to hire some of those foreign language students to translate your site !